Handbags at Dawn - Gucci Owner Sues Alibaba

The leading online marketplace Alibaba is being sued by the owner of Gucci, Yves Saint Laurent, Puma and various other leading fashion brands, Kering following a failed attempt to resolve the matter outside the courts. Kering has accused Alibaba of making it possible for US shoppers to order counterfeit goods in bulk from Alibaba's websites.  Alibaba has responded to the claims by stating that it has already taken action against such sales of fake goods and that it planned to fight the case.

"We continue to work in partnership with numerous brands to help them protect their intellectual property, and we have a strong track record of doing so...Unfortunately, Kering Group has chosen the path of wasteful litigation instead of the path of constructive co-operation" it said in a statement.

Kering defended its course of action stating that:

"Kering and its brands dedicate a great amount of creative energy, craftsmen's know-how and monetary investments to develop products that speak to consumers and fulfil their needs.  This lawsuit is part of Kering's ongoing global effort to maintain its customers' trust in its genuine products and to continue to develop the creative works and talents in its brands."

Indeed this is not the first time Alibaba has been criticised over illegal and counterfeit sales made on its platforms.  It's Taobao shopping service had appeared on the US Trade Representative's list of "notorious markets" until 2012, at which point the US authorities recognised it was making efforts to combat the problem.

Earlier this year, one of China's own regulators accused the company of failing to give the issue "sufficient attention", adding that Alibaba had let the "abscess fester until it became a danger".  The report was later pulled from China's State Administration for Industry and Commerce (SAIC)'s website.

Background

Kering originally took legal action in July 2014 but decided not to pursue the case after the sides agreed to discuss possible anti-counterfeit measures.  Following the breakdown of talks, the French firm has filed a new complaint in New York.

In the case filed Kering gives the example of a merchant that has used Taobao to "openly sell" wholesale quantities of "obviously fake Gucci products".  It also highlights that watches bearing Gucci's trademarked logo had been displayed when users searched for "replica wristwatches" on the site.

Kering alleges that the two cases are part of a much bigger problem.

"These specifically identifiable counterfeit products could not be sold without their assistance, but instead of shutting down the counterfeiters, the Alibaba defendants seek to profit from the counterfeiters' blatant violations," it states.

"The Alibaba defendants knowingly assist these counterfeiters in virtually all aspects of their illegal operations."

Alibaba's Response

Alibaba insisted it was enforcing a "zero tolerance policy" towards fakes during a recent conference call to bank analysts.  It stated that:

"We conduct periodic checks by using third parties to identify suspected counterfeit products on our marketplaces.  When we receive complaints or allegations regarding infringement for counterfeit groups, we follow well-developed procedures to take strict action."

"If allegations are posting or selling counterfeit products are substantiated, we penalise the parties involved through a number of means, including enforcing the seller to reimburse the buyer, assessing penalties against the seller by limiting their ability to add listings, adopting a name-and-shame policy and closing down store fronts and permanently banning the seller from establishing another store front."

We will keep you updated as the case progresses.

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